I remember the exact moment. The position was down $4,200 and my hand literally hovered over the close button. Then my brain whispered the most expensive sentence in trading: "But I've already lost so much, I can't close it now." I put the mouse down. I made a coffee. The position went to down $7,800 by lunch.

That frozen moment is textbook sunk cost fallacy — the cognitive bias where past losses, which are already gone and completely unrecoverable, distort your decision about what to do right now. The money already lost becomes emotionally entangled with your next move. The market doesn't care what you paid. It never did. Your entry price is invisible to every other participant on earth except you.

CONCEPTA position's future is determined by price action ahead — never by what you've already lost.
WARNINGEvery hour you hold a loser to "get back to breakeven" is a fresh decision — not loyalty to the past.
KEY IDEAYour entry price is data. Your current loss is data. Neither one tells you where price goes next.

The psychological mechanism is brutal in its elegance. Closing the trade makes the loss real — final, undeniable, logged in the statement. Staying open keeps alive a tiny irrational flicker of hope. Psychologists call this loss aversion, and it's roughly twice as painful to lose a dollar as it is pleasurable to gain one. So we manufacture reasons to stay in. "It'll bounce." "The thesis is still valid." "I'll just wait for a small recovery." I've said all of these. More than once. Sometimes in the same afternoon.

Drawdown: Exit Now vs. Hold on HopeEntry-$4.2k-$7.8kTime0-$4k-$8k❌ Should exit hereDisciplined exitSunk cost hold

The practical fix is annoyingly simple to describe and genuinely hard to execute: ask yourself, "If I had no position right now, would I enter this trade at this price?" If the answer is no, you already have your answer. The past cost is irrelevant to that question. Traders who build this habit are engaging with what economists call opportunity cost — what else could this capital be doing right now? The broader psychological framework is well documented under sunk cost theory on Wikipedia, and Investopedia's breakdown of loss aversion explains exactly why our brains make this feel so difficult even when the logic is obvious.

The market doesn't know your entry price, and it doesn't care about your feelings — so eventually, neither should you.

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